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| Falcon Tyres to raise Rs 100 cr |
| Press Trust of India / Kolkata Oct 15, 2009, 16:49 IST |
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Falcon Tyres is in talks with a couple of private equity funds to raise around Rs 100 crore through issue of fresh equity to part finance its capital expenditure of Rs 300 crore to increase production capacity to meet growing demand.
"We plan to invest Rs 300 crore in Falcon Tyres to ramp up the capacity to 14 lakh pieces a month from 9 lakh now by March 2010," Ruia group Chairman Pawan K Ruia has said.
"We are negotiating with some PE funds for raising Rs 100 crore and the proceeds would be used for the expansion to be funded through debt equity of 2:1," he said.
The equity expansion will reduce promoter's stake from 86 per cent now to 75 per cent within the next four to five months to meet the listing norms.
The placement would be done after the company arrives at a valuation for the company, which Ruia said has gone up significantly over the last two quarters.
"Our net profit in the first quarter (April-June) had gone up to Rs 12 crore and the profitability for the second current quarter would remain healthy," Ruia said.
Falcon, which makes tyres mostly for two-wheelers, is witnessing a surge in demand following a revival in the sales of motorcycles.
"We cannot cope with the demand and have gone for 7 days production in a week with three shifts," Ruia said.
The company has raised tyre prices by 6 per cent last week against industry average of 3 and 4 per cent.
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